The Economic Wall Around China. The Energy Report 04/10/2025

President Trump just built the great economic wall around China.  After all the criticisms surrounding President’s Trump’s tariff war against our friends, by isolating China it is a reminder to our allies that perhaps the trade enemy was never the US that had the lowest tariff in the world but really against China. In fact, it might be a reminder to all our trade partners that they too have been treated unfairly by China who steals intellectual property puts on ridiculously high tariffs and creates barriers for them to trade in China. The move by President Trump to raise tariffs on China was so inspiring that it caused Goldman Sachs to rescind their recession calls because now they are starting to understand President Trump’s big picture strategy.

Trump set off a stock market buying short covering fire storm after he reported on Truth Social, “Based on the lack of respect that China has shown to the World’s Markets, I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately. At some point, hopefully soon, China will realize that the days of ripping off the U.S.A., and other Countries, is no longer sustainable or acceptable. Conversely, and based on the fact that more than 75 Countries have called Representatives of the United States, including the Departments of Commerce, Treasury, and the USTR, to negotiate a solution to the subjects being discussed relative to Trade, Trade Barriers, Tariffs, Currency Manipulation, and Non-Monetary Tariffs, and that these Countries have not, at my strong suggestion, retaliated in any way, shape, or form against the United States, I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately. Thank you for your attention to this matter! What a nice, classy way to end that note. The world is paying attention.

Is the world going to start paying attention to oil inventories. Even though we love that oil prices came down reducing gasoline prices and inflation, we still must be concerned that the amount of the drop could cause some U.S. shale oil production. The son of shale pioneer, Scott Sheffield, the founder and former chief executive officer (CEO) of Pioneer Natural Resources,  Bryan Sheffield, warned that America’s shale drillers need to cut drilling immediately. He said it’s a bloodbath and that shale producers need to hunker down until this tariff war situation plays out. Mr. Sheffield is understandably concerned about the recurring price drops, noting that producers often maintain production levels despite fluctuations in market prices. Several other producers I consulted expressed similar worries, pointing out that producers sometimes fail to adjust their output quickly enough in response to price changes, resulting in overproduction.

Other producers believe that some shale producers will be more cautious. Andy Stauffer of “Ozark Gas LLC” mentioned that volatility has occurred before, and he thinks producers will take a careful approach before cutting drilling. Others suggest that cutting should begin sooner and that shale oil producers may be overly optimistic about prospects. Despite the volatility, supply and demand indicate that supplies in the United States remain tight, as confirmed by yesterday’s Energy Information Administration weekly report. The Short-Term Energy outlook was not released yesterday because the numbers are being updated to reflect recent market developments.

Yet the volatility beyond all the tariff report was very friendly for petroleum. EIA Reported that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 2.6 million barrels from the previous week. At 442.3 million barrels, U.S. crude oil inventories are about 5% below the five-year average for this time of year. Total motor gasoline inventories decreased by 1.6 million barrels from last week and are the same as the five-year average for this time of year. Finished gasoline inventories increased and blending components inventories decreased last week. Distillate fuel inventories decreased by 3.5 million barrels last week and are about 9% below the five-year average for this time of year.

Total products supplied over the last four-week period averaged 19.6 million barrels a day, down by 1.9% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 8.6 million barrels a day, down by 2.8% from the same period last year. Distillate fuel product supplied averaged 3.8 million barrels a day over the past four weeks, up by 7.3% from the same period last year. Jet fuel product supplied was up 5.2% compared with the same four-week period last year.

Natural gas is also bouncing back on the risk on situation with more countries committing to buy US natural gas. This is going to be a huge win for producers. Natural gas report today!

Once again, I want to thank all the loyal readers of the Energy Report for your kind comments and input! Starting tomorrow I will be traveling until Easter Monday so I wish you all the best and will resume the reports then. I hope everyone has a happy and Blessed Easter. The Energy Report will take a bit of a hiatus, but we’ll be back ready to rock!

And in the meantime, make sure you download the Fox Weather ap to keep up on weather developments and you should also stay tuned to the Fox Business Network because they are the only network in America that is invested in you.

You can still reach out to my team and open your futures trading account by calling 888-264-5665 or e-mail pflynn@pricegroup.com.

Thanks,